A one kilogram Swiss gold bar and US dollar gold coins are pictured in Paris on February 20, 2020.
JOEL SAGET | AFP via Getty Images
Gold prices rose on Tuesday, as a pullback in US Treasury yields added some luster to the metal after it hit a nine-month low in the previous session.
Spot gold rose 0.4% to $ 1,688.41 an ounce at 5:39 a.m. GMT. Prices fell more than 1% Monday to $ 1,676.10, their lowest since June 5.
US gold futures rose 0.5% to $ 1,686.70.
“Lower buyers emerged after falling 1.15% overnight and US bond yields eased slightly, which supported precious metals,” said Jeffrey Halley, senior market analyst at OANDA.
“Short-term gold techniques have plunged into oversold territory, which should provide temporary support during the session, but gains will likely be limited to the $ 1,700 region.”
Yields on 10-year US Treasuries edged down, increasing the attractiveness of holding gold.
A steady rise in bond yields makes holding gold less attractive, as investors generally tend to look to assets that generate regular income in the form of interest or dividends.
“In an environment of rising yields in the United States, resuming growth, vaccine rollouts and increasingly bullish investors on growth prospects, demand for safe havens will struggle,” said Lachlan Shaw, head of commodities research at the National Australia Bank.
While the US Federal Reserve has so far played down the rise in yields, the European Central Bank will discuss the merits of intervening to lower yields on Thursday.
“Central banks will have to try to strike a balance between returns that reflect reasonably at a reasonable speed, versus the upturn in economic activity, and so there may be adjustments along the way,” said Shaw.
The holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest level since April 2020 on Monday.
Silver rose 0.8% to $ 25.29 an ounce. Palladium climbed 0.1% to $ 2,316.54. Platinum gained 1.2% to $ 1,148.97.